October 2007 - Page 3 of 3 - Tomorrow's Transactions

By the way, a big thanks

Wednesday, 10 October 2007 by Dave Birch 3 Comments

[Dave Birch] To everyone who has given me support, feedback, criticism, ideas and prizes: a big thanks for helping the Digital Money Forum blog to make it all the way to becoming one of the eight blogs chosen for American Banker’s blogwatch.

Technorati Tags: payments

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Not a lot of people know that, no. 94

Tuesday, 9 October 2007 by Dave Birch Leave a Comment

[Dave Birch] I don’t normally read Paul Johnson‘s Spectator articles, in fact I don’t normally read The Spectator (although I am reading “A City Spectator: Bulls, Bears, Booms and Boondoggles”, the collection of Christopher Fildes’ superb Spectator columns on the City), but I happened on his recent piece on gold. It includes the story of the guinea, which I’m ashamed to say I didn’t know. In 1663, under Charles II, a new gold coin was minted in England. It became knows as the guinea, because the gold had come from the West African coast. It was originally worth one pound Sterling, but by 1694 it had risen to thirty shillings (note to non-British readers or British readers under the age of 40 or so: there were twenty shillings in one pound) because of inflation. Remember that England’s currency was a bit of a mess at the time, which is why the cleverest man who ever lived, Sir Isaac Newton (who, as an aside, invented the catflap as well as universal theory of gravitation), was put in the charge of the mint. The value of the pure gold guinea rose against the debased coinage of the realm. Under the currency reform of William III, it was pegged at 21 shillings and six pence (note for younger viewers: there were twelve pence in a shilling). In 1717, it was fixed at 21 shillings, which is why to this day in merry England (and other parts of the United Kingdom) a guinea is one pound and one shilling, or one pound and five pence in new money. From the eighteenth century onwards, the professional classes — as distinct from the working classes — dealt in guineas rather than pounds: I’m pretty sure that horses are still priced in guineas today although bills from gardeners and such like no longer have this charm.

Technorati Tags: coins, money

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Where next for U.K. cards?

Tuesday, 9 October 2007 by Dave Birch 2 Comments

[Dave Birch] In an article about the immediate future of credit cards in the U.K., which I found via the Sun newspaper I think (it’s a key source of financial insight…), the commentator focuses on dull subjects such as the continuing popularity of balance transfer deals — though these seem to me to encourage, rather than, “stop rate tarts”. For foreign viewers, I should explain that a rate tart (eg, me) is someone who takes a zero-interest balance transfer deal from a card issuer, never uses the card, and then switches to another zero-interest balance transfer deal at the end of the term. And why not? If a bank sends me a letter saying “please have some free money”, then of course I’ll tick the box marked “yes”. Anyway, what caught my eye was the comment that the only thing likely to change the market will be some genuine innovation (a topic of some discussion previously). The article goes on to say that

Perhaps Barclaycard’s upcoming Oyster/contactless payment/credit-card combo [he means the OnePulse card] will do that, at least for the London market. I expect it to significantly increase people’s spending, just as credit and debit cards did. Other providers will see its impact and will want to work on similar technology and infrastructure as fast as they can — if they can.

I think it’s fair to observe that in the case of Oyster, they can’t (because the deal with Barclays is exclusive for an initial period). But perhaps the author is right that contactless will spark off some new products — as it has in the U.S., where Visa USA has just announced the Micro Tag, a contactless keyring (like the PayPass fob and the American Express companion fob) instead of cards to pay for purchases under $25 by waving the device in front of a contactless payment terminal. Sadly, we can’t use these in the U.K. — for technical reasons to do with transactions being online, PINs, EMV scripts and such like — but we don’t especially need to worry about this, because there’s no doubt in my mind that the preferred contactless doo-dah (sorry for the technical argot) for most consumers, in most of the world, is their own phone.

Technorati Tags: contactless, credit cards, debit cards, fraud, security

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Identity fraud, theft, whatever

Monday, 8 October 2007 by Dave Birch 2 Comments

[Dave Birch] Because of a talk I gave at the University of Surrey, I was thinking about the labelling of identity “issues”. I remember seeing an post about this by Javelin earlier in the year, which made the point that whatever the actual taxonomy, the fact is the we need to be realistic:

a single overarching term (such as identity theft) is here to stay, and the label preferred by our government is now codified into use from the office of President on down.

I agree with them that, whatever the language, we need to avoid bundling account takeover and the like with “simple” card fraud — which is why the suggestion of “identity fraud” and “card fraud” seems reasonable and because (as was discussed at last years’ Digital Identity Forum, “identity theft” doesn’t really mean anything) — but no-one has yet come up with a good catch-all term to cover both of these. As an aside, there’s always post-modern ironic identity theft, which ought to be special category in its own right. Anyhow, whatever you call it, it’s back in the news again because British MPs have called for an Identity Czar to be appointed (presumably because the whole Drug Czar thing worked out so well).

Technorati Tags: banking, fraud, identity

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Blue Skype thinking

Friday, 5 October 2007 by Dave Birch 3 Comments

[Dave Birch] I remember thinking, when Skype announced that it would provide a a money transfer system using PayPal, that the connection between a payment mechanism and its “medium” could deliver sustainable competitive advantage. Hence for eBay, the combination of PayPal and Skype might well be a genuinely disruptive innovation. But is this true globally? As the commentator here wrote:

My ‘Internet friends’ are located in some far off places and tiny towns which do not appear on any tourist map! Their little known banks, different currencies and jurisdictional regulations often make it often impossible to quickly send or receive local funds. Consequently, we use digital money. PayPal is sometimes used but not often. Due to the different rules in each jurisdiction most of my friends don’t use PayPal.

As an aside, the article notes that Moneybookers, 1MDC, e-gold and Webmoney (which we looked at here recently) are all viable alternatives but it strikes me that they are each quite different — must look into this more in the future. Nevertheless, in the U.K. and other less far-flung places, the synergy between talking to (for example) a merchant via Skype and paying them (especially if pseudonymity is the natural choice) is real. There’s a “Send File” menu in my Skype but still no “Send Money” menu, so I don’t know what they’re doing about it: I would have expected an e-mail by now letting me know that I could log in to PayPal and link my PayPal account to my Skype username.

Technorati Tags: internet, p2p, payments

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Alternative thinking

Friday, 5 October 2007 by Dave Birch 4 Comments

[Dave Birch] When you’re discussing the future of identity in the U.K., it’s impossible to avoid talking about the national identity card scheme. What individuals, organisations, companies decide to do about identity depends to a great degree on what the national scheme looks like. So what should it look like? Should we even have one? My personal view is that the government should not scrap the proposed scheme but that it should radically rethink it. It should postpone introducing the physical ID card and focus instead on allocating a unique national identity number, backed by biometrics, to each citizen—that is all that needs to be held in a national register. I’m also in favour of using the “Austro-Canadian” idea of sector-specific numbers, with one-way cryptographic mapping from the national identity number stored on the register to the sector identity numbers stored in databases.

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Third men

Thursday, 4 October 2007 by Dave Birch Leave a Comment

[Dave Birch] By complete coincidence I found myself reading two papers on the “third way” for European cards this morning (yes, my life really is that interesting). The first from our good friends at Payment Systems Europe, the second from our good friends at Wellcome R/T. Welcome’s Pierre Boces has published a whitepaper that compares strategies for payment scheme competition. His perspective is that the existing international card schemes are so well-established that it would be better to focus on having them deliver more value to the marketplace than spending a lot of money creating a new “third way” euroscheme (whether under the EAPS or something else). Peter Jones from PSE also points out that creating a new “third way” euroscheme will involve considerable effort and expenditure and puts forward another alternative: hook up the ATM networks and then extend them to POS. As Peter points out, many of the domestic debit schemes that are vanishing because of SEPA started life at ATM networks anywa.

Technorati Tags: payments, SEPA

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